Correlation Between POSCO Holdings and ENTERGY

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Can any of the company-specific risk be diversified away by investing in both POSCO Holdings and ENTERGY at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining POSCO Holdings and ENTERGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and ENTERGY, you can compare the effects of market volatilities on POSCO Holdings and ENTERGY and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in POSCO Holdings with a short position of ENTERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and ENTERGY.

Diversification Opportunities for POSCO Holdings and ENTERGY

POSCOENTERGYDiversified AwayPOSCOENTERGYDiversified Away100%
-0.33
  Correlation Coefficient

Very good diversification

The 3 months correlation between POSCO and ENTERGY is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and ENTERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENTERGY and POSCO Holdings is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on POSCO Holdings are associated (or correlated) with ENTERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENTERGY has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and ENTERGY go up and down completely randomly.

Pair Corralation between POSCO Holdings and ENTERGY

Assuming the 90 days horizon POSCO Holdings is expected to generate 1.25 times less return on investment than ENTERGY. In addition to that, POSCO Holdings is 1.71 times more volatile than ENTERGY. It trades about 0.14 of its total potential returns per unit of risk. ENTERGY is currently generating about 0.3 per unit of volatility. If you would invest  7,297  in ENTERGY on November 30, 2024 and sell it today you would earn a total of  803.00  from holding ENTERGY or generate 11.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

POSCO Holdings  vs.  ENTERGY

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-10010
JavaScript chart by amCharts 3.21.15PKX ETY
       Timeline  
POSCO Holdings 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days POSCO Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, POSCO Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb3840424446485052
ENTERGY 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in ENTERGY are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, ENTERGY may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb70727476788082

POSCO Holdings and ENTERGY Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.47-3.35-2.22-1.1-0.01791.042.113.184.265.33 0.050.100.150.20
JavaScript chart by amCharts 3.21.15PKX ETY
       Returns  

Pair Trading with POSCO Holdings and ENTERGY

The main advantage of trading using opposite POSCO Holdings and ENTERGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings position performs unexpectedly, ENTERGY can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in ENTERGY will offset losses from the drop in ENTERGY's long position.
The idea behind POSCO Holdings and ENTERGY pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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